<\/p>\n
\u201cThe IMO has brought in significant, ambitious and important targets around emissions,\u201d said Clarksons Research\u2019s managing director Stephen Gordon. It remains unclear the exact policies and regulations that might be introduced and what technology will be adopted, he said. Ships are long-term investments, and buyers run the risk that their vessels will become obsolete.<\/p>\n
<\/p>\n
The global shipping industry is in the midst of one of its biggest changes in a generation after stricter environmental rules<\/a> kicked in at the start of the year. Ship owners face paying more for cleaner fuel, retrofitting ships with pollution-reducing scrubbers or even ordering new vessels. Compounding the uncertainty has been Covid-19, which has upended supply chains and stalled trade flows.<\/p>\n <\/p>\n \u201cCovid-19 has become the most immediate issue,\u201d Gordon said. While challenges due to lockdown measures are easing, \u201cthe economic uncertainty, disruption to trade, and volatility in freight rates\u201d caused by the virus are driving orders lower.<\/p>\n <\/p>\n Demand growth for containers is expected to fall<\/a> this year due to Covid-19, according to A.P. Moller-Maersk A\/S, which predicts a return to 2019 volumes<\/a> in the early part of 2021. The world\u2019s largest container line ordered only eight vessels in the second quarter, putting its orderbook-to-fleet ratio at 9.4%. Globally, the rate is about 8%, meaning orders for new ships are at a two-decade low, according to Clarksons\u2019 Gordon.<\/p>\n <\/p>\n \u201cThe virus is a further hit to demand that\u2019s already barely even there,\u201d said Rahul Kapoor, head of commodity analytics & research, maritime & trade at IHS Markit. \u201cWith the pandemic\u2019s hit to economic activity and supply chains, ordering new ships is now the lowest priority for companies. They\u2019re concentrating on just trying to maintain profit margins.\u201d The virus has also delayed the completion of shipbuilding projects, he said.<\/p>\n <\/p>\n Shipowners are also lacking the finances to make purchases, according to Ralph Leszczynski, head of research at shipbroker Banchero Costa & Co.<\/p>\n <\/p>\n \u201cMost shipping markets are coming from a relatively poor decade, 2009 to 2019, in terms of earnings so most shipowners do not have that much cash in their pockets,\u201d he said. \u201cExternal finance is also in short supply as banks are now largely steering clear off shipping after the defaults they suffered after 2008.\u201d<\/p>\n <\/p>\n Still, fewer orders and slower fleet growth will likely bolster shipping rates. Lines are likely to continue to keep capacity in check into 2021 to minimize the impact from slowing global trade, said IHS Markit\u2019s Kapoor.<\/p>\n <\/p>\n That\u2019s already translating to increasing costs for transporting goods by ocean liner, with one benchmark of trans-Pacific container rates more than doubling since late-May to a record. Bulk-carrier costs have also rebounded from a four-year low. Maersk, which idled about 20% of its capacity in April before gradually reinstating it in subsequent months, saw earnings beat estimates in part due to improved freight rates.<\/p>\n <\/p>\n The offshore sector has seen demand for oil rigs and supply vessels hammered as energy prices remain low and there\u2019s little interest in new exploration investments, said Leszczynski. It\u2019s a \u201cgamble\u201d to purchase an oil tanker amid uncertainty over demand, he said. While oil consumption has grown in the past two decades, climate change mitigation efforts are spurring market expectations that appetite will decline.<\/p>\n <\/p>\n While the coronavirus adds to short-term uncertainty, there\u2019s a better medium-to-long term outlook. Qatar signed a deal<\/a> in June worth around $19 billion with South Korean shipbuilders for more than 100 liquefied natural gas vessels, Maersk expects a progressive recovery in volumes and port operator DP World said it\u2019s positive<\/a> on fundamentals.<\/p>\n <\/p>\n The shipbuilding sector is set to remain subdued for the next few years, with a revival possible eight to 10 years from now, said Leszczynski. Vessels built during the boom years of between 2007 and 2010 will require replacement, as most have a lifespan of about 20 to 25 years, he said.<\/p>\n <\/p>\n \u2013With assistance from Kyunghee Park.<\/p>\n <\/p>\n \u00a9 2020 Bloomberg L.P<\/em><\/p>\n gCaptain<\/p>\n","protected":false},"excerpt":{"rendered":" \u201cThe IMO has brought in significant, ambitious and important targets around emissions,\u201d said Clarksons Research\u2019s managing director Stephen Gordon. It remains unclear the exact policies and regulations that might be introduced and what technology will be adopted, he said. Ships are long-term investments, and buyers run the risk that their vessels will become obsolete. The …<\/p>\n","protected":false},"author":1,"featured_media":16397,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56],"tags":[1465,1732,1727,1375,10582,1501,1070],"class_list":["post-16396","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marine-world","tag-builds","tag-crisis","tag-decade","tag-global","tag-mend","tag-orders","tag-ship"],"_links":{"self":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/16396","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/comments?post=16396"}],"version-history":[{"count":0,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/16396\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media\/16397"}],"wp:attachment":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media?parent=16396"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/categories?post=16396"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/tags?post=16396"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}